The Big Apple emerged after the first quarter a bit shinier, at least from the perspective of the availability rate. There was a slight bruise, but otherwise the market was juicy and delicious (okay, enough apple references). Of course, this viewpoint is predicated on the belief that a lower availability rate is a good thing, and I personally think it is. While that could generally be considered the landlord’s view, it’s also a reflection on the general health of the economy–and we all want good things for that!
For Manhattan as a whole–well 65th Street south to the Battery, at least–the overall availability rate eased to 11.3 percent from 12.2 percent in the fourth quarter of 2012. This is its best quarterly rate since back in the fourth quarter of 2008, just after the collapse of Lehman Brothers and before the worst point of the last recession. Direct and sublet availability were both down significantly.
Midtown was the (small) bruise on the apple for the first quarter. Its availability rose 20 basis points, to 12.4 percent. The increase was concentrated in two districts (Westside/Times Square and Park Avenue) and three blocks of space: 817,000 square feet at 4 Times Square, 415,000 square feet at 1633 Broadway and 188,000 square feet at 350 Park Avenue.
Midtown South closed the quarter with its lowest availability rate since the third quarter of 2008–8.8 percent. Direct availability has dropped below 10 million square feet for the first time in over five years. Furthermore, the availability rate fell in 8 of the 9 Midtown South districts; the increase came in the Lower Sixth Avenue district and that was only minimal.
Downtown continued to perform very well, with its availability rate plummeting 200 basis points to 12.7 percent. It’s hard not to be impressed with this submarket considering that as recently as the third quarter of 2011, that figure was 17.0 percent. Only City Hall/Insurance recorded a higher rate thanks to 448,000 square feet now being marketed at 195 Broadway.
The next three quarters look to be a mixed (apple) bag. There will be some additional space hitting the market–1 World Trade Center comes online mid-year and there are a few additional blocks from relocating tenants in Midtown. But there is a hint that financial services is growing again and that, along with Tech/Advertising/Media/Information (TAMI), could mean an even shinier market.